THIRD DIVISION

[G.R. No. 210987. November 24, 2014.]

THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE

COMPANY, petitioner, vs. THE SECRETARY OF FINANCE and
THE COMMISSIONER OF INTERNAL REVENUE, respondents.

DECISION

VELASCO, JR., J : p

Nature of the Case

Before the Court is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court assailing and seeking the reversal of the Resolutions of
the Court of Appeals (CA) in CA-G.R. SP No. 127984, dated May 23, 2013 1
and January 21, 2014, which dismissed outright the petitioner's appeal from
the Secretary of Finance's review of BIR Ruling No. 015-12 2 for lack of
jurisdiction.
The Facts
Petitioner The Philippine American Life and General Insurance
Company (Philamlife) used to own 498,590 Class A shares in Philam Care
Health Systems, Inc. (PhilamCare), representing 49.89% of the latter's
outstanding capital stock. In 2009, petitioner, in a bid to divest itself of its
interests in the health maintenance organization industry, offered to sell its
shareholdings in PhilamCare through competitive bidding. Thus, on
September 24, 2009, petitioner's Class A shares were sold for USD2,190,000,
or PhP104,259,330 based on the prevailing exchange rate at the time of the
sale, to STI Investments, Inc., who emerged as the highest bidder. 3
After the sale was completed and the necessary documentary stamp
and capital gains taxes were paid, Philamlife filed an application for a
certificate authorizing registration/tax clearance with the Bureau of Internal
Revenue (BIR) Large Taxpayers Service Division to facilitate the transfer of
the shares. Months later, petitioner was informed that it needed to secure a
BIR ruling in connection with its application due to potential donor's tax
liability. In compliance, petitioner, on January 4, 2012, requested a ruling 4 to
confirm that the sale was not subject to donor's tax, pointing out, in its
request, the following: that the transaction cannot attract donor's tax liability
since there was no donative intent and, ergo, no taxable donation, citing BIR
Ruling [DA-(DT-065) 715-09] dated November 27, 2009; 5 that the shares
were sold at their actual fair market value and at arm's length; that as long
as the transaction conducted is at arm's length — such that a bona fide
business arrangement of the dealings is done in the ordinary course of
business — a sale for less than an adequate consideration is not subject to
donor's tax; and that donor's tax does not apply to sale of shares sold in an
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 open bidding process.
On January 4, 2012, however, respondent Commissioner on Internal
Revenue (Commissioner) denied Philamlife's request through BIR Ruling No.
015-12. As determined by the Commissioner, the selling price of the shares
thus sold was lower than their book value based on the financial statements
of PhilamCare as of the end of 2008. 6 As such, the Commissioner held,
donor's tax became imposable on the price difference pursuant to Sec. 100
of the National Internal Revenue Code (NIRC), viz.: HCaEAT

SEC. 100. Transfer for Less Than Adequate and full

Consideration. — Where property, other than real property referred
to in Section 24(D), is transferred for less than an adequate and full
consideration in money or money's worth, then the amount by which
the fair market value of the property exceeded the value of the
consideration shall, for the purpose of the tax imposed by this
Chapter, be deemed a gift, and shall be included in computing the
amount of gifts made during the calendar year.

The afore-quoted provision, the Commissioner added, is implemented

by Revenue Regulations 6-2008 (RR 6-2008), which provides:
SEC. 7. SALE, BARTER OR EXCHANGE OF SHARES OF STOCK NOT
TRADED THROUGH A LOCAL STOCK EXCHANGE PURSUANT TO SECS.
24(C), 25(A)(3), 25(B), 27(D)(2), 28(A)(7)(c), 28(B)(5)(c) OF THE TAX
CODE, AS AMENDED. —

xxx xxx xxx

(c) Determination of Amount and Recognition of Gain or Loss —

(c.1) In the case of cash sale, the selling price shall be the
consideration per deed of sale.

xxx xxx xxx

(c.1.4) In case the fair market value of the shares of stock sold,
bartered, or exchanged is greater than the amount of money and/or
fair market value of the property received, the excess of the fair
market value of the shares of stock sold, bartered or exchanged over
the amount of money and the fair market value of the property, if
any, received as consideration shall be deemed a gift subject to the
donor's tax under Section 100 of the Tax Code, as amended.

xxx xxx xxx

(c.2) Definition of 'fair market value' of Shares of Stock. — For
purposes of this Section, 'fair market value' of the share of stock sold
shall be:

xxx xxx xxx

(c.2.2) In the case of shares of stock not listed and traded in the local
stock exchanges, the book value of the shares of stock as shown in
the financial statements duly certified by an independent certified
public accountant nearest to the date of sale shall be the fair market
value.
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 In view of the foregoing, the Commissioner ruled that the difference
between the book value and the selling price in the sales transaction is
taxable donation subject to a 30% donor's tax under Section 99 (B) of the
NIRC. 7 Respondent Commissioner likewise held that BIR Ruling [DA-(DT-065)
715-09], on which petitioner anchored its claim, has already been revoked
by Revenue Memorandum Circular (RMC) No. 25-2011. 8
Aggrieved, petitioner requested respondent Secretary of Finance
(Secretary) to review BIR Ruling No. 015-12, but to no avail. For on
November 26, 2012, respondent Secretary affirmed the Commissioner's
assailed ruling in its entirety. 9
Ruling of the Court of Appeals
Not contented with the adverse results, petitioner elevated the case to
the CA via a petition for review under Rule 43, assigning the following errors:
10

A.

The Honorable Secretary of Finance gravely erred in not finding that

the application of Section 7(c.2.2) of RR 06-08 in the Assailed Ruling
and RMC 25-11 is void insofar as it alters the meaning and scope of
Section 100 of the Tax Code.
B.

The Honorable Secretary of Finance gravely erred in finding that

Section 100 of the Tax Code is applicable to the sale of the Sale of
Shares.

1.

The Sale of Shares were sold at their fair market value and
for fair and full consideration in money or money's worth.
2.

The sale of the Sale Shares is a bona fide business

transaction without any donative intent and is therefore
beyond the ambit of Section 100 of the Tax Code.
3.
It is superfluous for the BIR to require an express provision
for the exemption of the sale of the Sale Shares from
donor's tax since Section 100 of the Tax Code does not
explicitly subject the transaction to donor's tax.
C.

The Honorable Secretary of Finance gravely erred in failing to find

that in the absence of any of the grounds mentioned in Section 246 of
the Tax Code, rules and regulations, rulings or circulars — such as
RMC 25-11 — cannot be given retroactive application to the prejudice
of Philamlife.

On May 23, 2013, the CA issued the assailed Resolution dismissing the
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 CA Petition, thusly: HaAISC

WHEREFORE, the Petition for Review dated January 9, 2013 is

DISMISSED for lack of jurisdiction.
SO ORDERED.

In disposing of the CA petition, the appellate court ratiocinated that it

is the Court of Tax Appeals (CTA), pursuant to Sec. 7 (a) (1) of Republic Act
No. 1125 (RA 1125), 11 as amended, which has jurisdiction over the issues
raised. The outright dismissal, so the CA held, is predicated on the postulate
that BIR Ruling No. 015-12 was issued in the exercise of the Commissioner's
power to interpret the NIRC and other tax laws. Consequently, requesting for
its review can be categorized as "other matters arising under the NIRC or
other laws administered by the BIR," which is under the jurisdiction of the
CTA, not the CA.
Philamlife eventually sought reconsideration but the CA, in its equally
assailed January 21, 2014 Resolution, maintained its earlier position. Hence,
the instant recourse.
Issues
Stripped to the essentials, the petition raises the following issues in
both procedure and substance:

1. Whether or not the CA erred in dismissing the CA Petition for

lack of jurisdiction; and

2. Whether or not the price difference in petitioner's adverted sale

of shares in PhilamCare attracts donor's tax.

Procedural Arguments
a. Petitioner's contentions
Insisting on the propriety of the interposed CA petition, Philamlife,
while conceding that respondent Commissioner issued BIR Ruling No. 015-12
in accordance with her authority to interpret tax laws, argued nonetheless
that such ruling is subject to review by the Secretary of Finance under Sec. 4
of the NIRC, to wit:
SECTION 4. Power of the Commissioner to Interpret Tax Laws and to
Decide Tax Cases. — The power to interpret the provisions of this
Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the
Secretary of Finance.
The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.

Petitioner postulates that there is a need to differentiate the rulings

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 promulgated by the respondent Commissioner relating to those rendered
under the first paragraph of Sec. 4 of the NIRC, which are appealable to the
Secretary of Finance, from those rendered under the second paragraph of
Sec. 4 of the NIRC, which are subject to review on appeal with the CTA. This
distinction, petitioner argues, is readily made apparent by Department Order
No. 7-02, 12 as circularized by RMC No. 40-A-02.
Philamlife further averred that Sec. 7 of RA 1125, as amended, does
not find application in the case at bar since it only governs appeals from the
Commissioner's rulings under the second paragraph and does not
encompass rulings from the Secretary of Finance in the exercise of his power
of review under the first, as what was elevated to the CA. It added that under
RA 1125, as amended, the only decisions of the Secretary appealable to the
CTA are those rendered in customs cases elevated to him automatically
under Section 2315 of the Tariff and Customs Code. 13
There is, thus, a gap in the law when the NIRC, as couched, and RA
1125, as amended, failed to supply where the rulings of the Secretary in its
exercise of its power of review under Sec. 4 of the NIRC are appealable to.
This gap, petitioner submits, was remedied by British American Tobacco v.
Camacho 14 wherein the Court ruled that where what is assailed is the
validity or constitutionality of a law, or a rule or regulation issued by the
administrative agency, the regular courts have jurisdiction to pass upon
the same. aSTAHD

In sum, appeals questioning the decisions of the Secretary of Finance

in the exercise of its power of review under Sec. 4 of the NIRC are not within
the CTA's limited special jurisdiction and, according to petitioner, are
appealable to the CA via a Rule 43 petition for review.
b. Respondents' contentions
Before the CA, respondents countered petitioner's procedural
arguments by claiming that even assuming arguendo that the CTA does not
have jurisdiction over the case, Philamlife, nevertheless, committed a fatal
error when it failed to appeal the Secretary of Finance's ruling to the Office
of the President (OP). As made apparent by the rules, the Department of
Finance is not among the agencies and quasi-judicial bodies enumerated
under Sec. 1, Rule 43 of the Rules of Court whose decisions and rulings are
appealable through a petition for review. 15 This is in stark contrast to the
OP's specific mention under the same provision, so respondents pointed out.
To further reinforce their argument, respondents cite the President's
power of review emanating from his power of control as enshrined under
Sec. 17 of Article VII of the Constitution, which reads:
Section 17. The President shall have control of all the executive
departments, bureaus, and offices. He shall ensure that the laws be
faithfully executed.

The nature and extent of the President's constitutionally granted power

of control have been defined in a plethora of cases, most recently in Elma v.
Jacobi, 16 wherein it was held that:
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 . . . This power of control, which even Congress cannot limit, let
alone withdraw, means the power of the Chief Executive to review,
alter, modify, nullify, or set aside what a subordinate, e.g., members of
the Cabinet and heads of line agencies, had done in the performance of
their duties and to substitute the judgment of the former for that of the
latter.

In their Comment on the instant petition, however, respondents

asseverate that the CA did not err in its holding respecting the CTA's
jurisdiction over the controversy.
The Court's Ruling
The petition is unmeritorious.
Reviews by the Secretary of
Finance pursuant to Sec. 4 of
the NIRC are appealable to the
CTA
To recapitulate, three different, if not conflicting, positions as indicated
below have been advanced by the parties and by the CA as the proper
remedy open for assailing respondents' rulings:

1. Petitioners: The ruling of the Commissioner is subject to review

by the Secretary under Sec. 4 of the NIRC, and that of the
Secretary to the CA via Rule 43;

2. Respondents: The ruling of the Commissioner is subject to

review by the Secretary under Sec. 4 of the NIRC, and that of
the Secretary to the Office of the President before appealing
to the CA via a Rule 43 petition; and
3. CA: The ruling of the Commissioner is subject to review by the
CTA.
We now resolve. ICAcHE

Preliminarily, it bears stressing that there is no dispute that what is

involved herein is the respondent Commissioner's exercise of power under
the first paragraph of Sec. 4 of the NIRC — the power to interpret tax laws.
This, in fact, was recognized by the appellate court itself, but erroneously
held that her action in the exercise of such power is appealable directly to
the CTA. As correctly pointed out by petitioner, Sec. 4 of the NIRC readily
provides that the Commissioner's power to interpret the provisions of this
Code and other tax laws is subject to review by the Secretary of
Finance. The issue that now arises is this — where does one seek
immediate recourse from the adverse ruling of the Secretary of
Finance in its exercise of its power of review under Sec. 4?
Admittedly, there is no provision in law that expressly provides where
exactly the ruling of the Secretary of Finance under the adverted NIRC
provision is appealable to. However, We find that Sec. 7 (a) (1) of RA 1125,
as amended, addresses the seeming gap in the law as it vests the CTA,
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 albeit impliedly, with jurisdiction over the CA petition as "other matters"
arising under the NIRC or other laws administered by the BIR. As stated:
Sec. 7. Jurisdiction. — The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as

herein provided:

1. Decisions of the Commissioner of Internal

Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other
matters arising under the National Internal
Revenue or other laws administered by the Bureau
of Internal Revenue. (emphasis supplied)

Even though the provision suggests that it only covers rulings of the
Commissioner, We hold that it is, nonetheless, sufficient enough to include
appeals from the Secretary's review under Sec. 4 of the NIRC.
It is axiomatic that laws should be given a reasonable interpretation
which does not defeat the very purpose for which they were passed. 17
Courts should not follow the letter of a statute when to do so would depart
from the true intent of the legislature or would otherwise yield conclusions
inconsistent with the purpose of the act. 18 This Court has, in many cases
involving the construction of statutes, cautioned against narrowly
interpreting a statute as to defeat the purpose of the legislator, and rejected
the literal interpretation of statutes if to do so would lead to unjust or absurd
results. 19
Indeed, to leave undetermined the mode of appeal from the Secretary
of Finance would be an injustice to taxpayers prejudiced by his adverse
rulings. To remedy this situation, We imply from the purpose of RA 1125 and
its amendatory laws that the CTA is the proper forum with which to institute
the appeal. This is not, and should not, in any way, be taken as a derogation
of the power of the Office of President but merely as recognition that
matters calling for technical knowledge should be handled by the agency or
quasi-judicial body with specialization over the controversy. As the
specialized quasi-judicial agency mandated to adjudicate tax, customs, and
assessment cases, there can be no other court of appellate jurisdiction that
can decide the issues raised in the CA petition, which involves the tax
treatment of the shares of stocks sold.
Petitioner, though, next invites attention to the ruling in Ursal v. Court
of Tax Appeals 20 to argue against granting the CTA jurisdiction by
implication, viz.:
Republic Act No. 1125 creating the Court of Tax Appeals did not
grant it blanket authority to decide any and all tax disputes. Defining
such special court's jurisdiction, the Act necessarily limited its authority
to those matters enumerated therein. In line with this idea we recently
approved said court's order rejecting an appeal to it by Lopez & Sons
from the decision of the Collector of Customs, because in our opinion
its jurisdiction extended only to a review of the decisions of the
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 Commissioner of Customs, as provided by the statute — and not to
decisions of the Collector of Customs. (Lopez & Sons vs. The Court of
Tax Appeals, 100 Phil., 850, 53 Off. Gaz., [10] 3065).
xxx xxx xxx
. . . Republic Act No. 1125 is a complete law by itself and
expressly enumerates the matters which the Court of Tax Appeals may
consider; such enumeration excludes all others by implication.
Expressio unius est exclusio alterius.
Petitioner's contention is untenable. Lest the ruling in Ursal be taken
out of context, but worse as a precedent, it must be noted that the primary
reason for the dismissal of the said case was that the petitioner therein
lacked the personality to file the suit with the CTA because he was not
adversely affected by a decision or ruling of the Collector of Internal
Revenue, as was required under Sec. 11 of RA 1125. 21 As held: TIDaCE

We share the view that the assessor had no personality to resort

to the Court of Tax Appeals. The rulings of the Board of Assessment
Appeals did not "adversely affect" him. At most it was the City of Cebu
that had been adversely affected in the sense that it could not
thereafter collect higher realty taxes from the abovementioned
property owners. His opinion, it is true had been overruled; but the
overruling inflicted no material damage upon him or his office. And the
Court of Tax Appeals was not created to decide mere conflicts of
opinion between administrative officers or agencies. Imagine an
income tax examiner resorting to the Court of Tax Appeals whenever
the Collector of Internal Revenue modifies, or lower his assessment on
the return of a tax payer" 22

The appellate power of the

CTA includes certiorari
Petitioner is quick to point out, however, that the grounds raised in its
CA petition included the nullity of Section 7 (c.2.2) of RR 06-08 and RMC 25-
11. In an attempt to divest the CTA jurisdiction over the controversy,
petitioner then cites British American Tobacco , wherein this Court has
expounded on the limited jurisdiction of the CTA in the following wise:
While the above statute confers on the CTA jurisdiction to
resolve tax disputes in general, this does not include cases
where the constitutionality of a law or rule is challenged.
Where what is assailed is the validity or constitutionality of a
law, or a rule or regulation issued by the administrative agency
in the performance of its quasi-legislative function, the regular
courts have jurisdiction to pass upon the same. The
determination of whether a specific rule or set of rules issued by an
administrative agency contravenes the law or the constitution is within
the jurisdiction of the regular courts. Indeed, the Constitution vests the
power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the
regional trial courts. This is within the scope of judicial power, which
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 includes the authority of the courts to determine in an appropriate
action the validity of the acts of the political departments. Judicial
power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government. 23

Vis-a-vis British American Tobacco , it bears to stress what appears to

be a contrasting ruling in Asia International Auctioneers, Inc. v. Parayno, Jr. ,
to wit:
Similarly, in CIR v. Leal , pursuant to Section 116 of Presidential
Decree No. 1158 (The National Internal Revenue Code, as amended)
which states that "[d]ealers in securities shall pay a tax equivalent to
six (6%) per centum of their gross income. Lending investors shall pay
a tax equivalent to five (5%) per cent, of their gross income," the CIR
issued Revenue Memorandum Order (RMO) No. 15-91 imposing 5%
lending investor's tax on pawnshops based on their gross income and
requiring all investigating units of the BIR to investigate and assess the
lending investor's tax due from them. The issuance of RMO No. 15-91
was an offshoot of the CIR's finding that the pawnshop business is akin
to that of "lending investors" as defined in Section 157(u) of the Tax
Code. Subsequently, the CIR issued RMC No. 43-91 subjecting pawn
tickets to documentary stamp tax. Respondent therein, Josefina Leal,
owner and operator of Josefina's Pawnshop, asked for a reconsideration
of both RMO No. 15-91 and RMC No. 43-91, but the same was denied
by petitioner CIR. Leal then filed a petition for prohibition with the RTC
of San Mateo, Rizal, seeking to prohibit petitioner CIR from
implementing the revenue orders. The CIR, through the OSG, filed a
motion to dismiss on the ground of lack of jurisdiction. The RTC denied
the motion. Petitioner filed a petition for certiorari and prohibition with
the CA which dismissed the petition "for lack of basis." In reversing the
CA, dissolving the Writ of Preliminary Injunction issued by the trial
court and ordering the dismissal of the case before the trial court, the
Supreme Court held that "[t]he questioned RMO No. 15-91 and
RMC No. 43-91 are actually rulings or opinions of the
Commissioner implementing the Tax Code on the taxability of
pawnshops." They were issued pursuant to the CIR's power
under Section 245 of the Tax Code "to make rulings or opinions
in connection with the implementation of the provisions of
internal revenue laws, including ruling on the classification of
articles of sales and similar purposes." The Court held that under
R.A. No. 1125 (An Act Creating the Court of Tax Appeals), as amended,
such rulings of the CIR are appealable to the CTA .

In the case at bar, the assailed revenue regulations and

revenue memorandum circulars are actually rulings or opinions
of the CIR on the tax treatment of motor vehicles sold at public
auction within the SSEZ to implement Section 12 of R.A. No.
7227 which provides that "exportation or removal of goods from the
territory of the [SSEZ] to the other parts of the Philippine territory shall
be subject to customs duties and taxes under the Customs and Tariff
Code and other relevant tax laws of the Philippines." They were
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 issued pursuant to the power of the CIR under Section 4 of the
National Internal Revenue Code . . . . 24 (emphasis added)

The respective teachings in British American Tobacco and Asia

International Auctioneers, at first blush, appear to bear no conflict — that
when the validity or constitutionality of an administrative rule or regulation
is assailed, the regular courts have jurisdiction; and if what is assailed are
rulings or opinions of the Commissioner on tax treatments, jurisdiction over
the controversy is lodged with the CTA. The problem with the above
postulates, however, is that they failed to take into consideration one crucial
point — a taxpayer can raise both issues simultaneously. HDCAaS

Petitioner avers that there is now a trend wherein both the CTA and the
CA disclaim jurisdiction over tax cases: on the one hand, mere prayer for the
declaration of a tax measure's unconstitutionality or invalidity before the
CTA can result in a petition's outright dismissal, and on the other hand, the
CA will likewise dismiss the same petition should it find that the primary
issue is not the tax measure's validity but the assessment or taxability of the
transaction or subject involved. To illustrate this point, petitioner cites the
assailed Resolution, thusly:
Admittedly, in British American Tobacco vs. Camac ho, the
Supreme Court has ruled that the determination of whether a specific
rule or set of rules issued by an administrative agency contravenes the
law or the constitution is within the jurisdiction of the regular courts,
not the CTA.
xxx xxx xxx

Petitioner essentially questions the CIR's ruling that Petitioner's

sale of shares is a taxable donation under Sec. 100 of the NIRC. The
validity of Sec. 100 of the NIRC, Sec. 7 (C.2.2) and RMC 25-11 is merely
questioned incidentally since it was used by the CIR as bases for its
unfavourable opinion. Clearly, the Petition involves an issue on the
taxability of the transaction rather than a direct attack on the
constitutionality of Sec. 100, Sec. 7 (c.2.2.) of RR 06-08 and RMC 25-11.
Thus, the instant Petition properly pertains to the CTA under Sec. 7 of
RA 9282.

As a result of the seemingly conflicting pronouncements, petitioner

submits that taxpayers are now at a quandary on what mode of appeal
should be taken, to which court or agency it should be filed, and which case
law should be followed.
Petitioner's above submission is specious.
In the recent case of City of Manila v. Grecia-Cuerdo, 25 the Court en
banc has ruled that the CTA now has the power of certiorari in cases within
its appellate jurisdiction. To elucidate:
The prevailing doctrine is that the authority to issue writs of
certiorari involves the exercise of original jurisdiction which must be
expressly conferred by the Constitution or by law and cannot be
implied from the mere existence of appellate jurisdiction. Thus, . . . this
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 Court has ruled against the jurisdiction of courts or tribunals over
petitions for certiorari on the ground that there is no law which
expressly gives these tribunals such power. It must be observed,
however, that . . . these rulings pertain not to regular courts but to
tribunals exercising quasi-judicial powers. With respect to the
Sandiganbayan, Republic Act No. 8249 now provides that the special
criminal court has exclusive original jurisdiction over petitions for the
issuance of the writs of mandamus , prohibition, certiorari, habeas
corpus, injunctions, and other ancillary writs and processes in aid of its
appellate jurisdiction.
In the same manner, Section 5 (1), Article VIII of the 1987
Constitution grants power to the Supreme Court, in the exercise of its
original jurisdiction, to issue writs of certiorari, prohibition and
mandamus . With respect to the Court of Appeals, Section 9 (1) of Batas
Pambansa Blg. 129 (BP 129) gives the appellate court, also in the
exercise of its original jurisdiction, the power to issue, among others, a
writ of certiorari, whether or not in aid of its appellate jurisdiction. As to
Regional Trial Courts, the power to issue a writ of certiorari, in the
exercise of their original jurisdiction, is provided under Section 21 of BP
129.
The foregoing notwithstanding, while there is no express grant of
such power, with respect to the CTA, Section 1, Article VIII of the 1987
Constitution provides, nonetheless, that judicial power shall be vested
in one Supreme Court and in such lower courts as may be established
by law and that judicial power includes the duty of the courts of justice
to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government. EIDTAa

On the strength of the above constitutional provisions, it can be

fairly interpreted that the power of the CTA includes that of
determining whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the
part of the RTC in issuing an interlocutory order in cases
falling within the exclusive appellate jurisdiction of the tax
court. It, thus, follows that the CTA, by constitutional mandate,
is vested with jurisdiction to issue writs of certiorari in these
cases.
Indeed, in order for any appellate court to effectively exercise its
appellate jurisdiction, it must have the authority to issue, among
others, a writ of certiorari. In transferring exclusive jurisdiction over
appealed tax cases to the CTA, it can reasonably be assumed that the
law intended to transfer also such power as is deemed necessary, if not
indispensable, in aid of such appellate jurisdiction. There is no
perceivable reason why the transfer should only be considered as
partial, not total. (emphasis added)

Evidently, City of Manila can be considered as a departure from Ursal

in that in spite of there being no express grant in law, the CTA is deemed
granted with powers of certiorari by implication. Moreover, City of Manila
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 diametrically opposes British American Tobacco to the effect that it is now
within the power of the CTA, through its power of certiorari, to rule on the
validity of a particular administrative rule or regulation so long as it is within
its appellate jurisdiction. Hence, it can now rule not only on the
propriety of an assessment or tax treatment of a certain
transaction, but also on the validity of the revenue regulation or
revenue memorandum circular on which the said assessment is
based.
Guided by the doctrinal teaching in resolving the case at bar, the fact
that the CA petition not only contested the applicability of Sec. 100 of the
NIRC over the sales transaction but likewise questioned the validity of Sec 7
(c.2.2) of RR 06-08 and RMC 25-11 does not divest the CTA of its jurisdiction
over the controversy, contrary to petitioner's arguments.
The price difference is subject
to donor's tax
Petitioner's substantive arguments are unavailing. The absence of
donative intent, if that be the case, does not exempt the sales of stock
transaction from donor's tax since Sec. 100 of the NIRC categorically states
that the amount by which the fair market value of the property exceeded the
value of the consideration shall be deemed a gift. Thus, even if there is no
actual donation, the difference in price is considered a donation by fiction of
law.
Moreover, Sec. 7 (c.2.2) of RR 06-08 does not alter Sec. 100 of the
NIRC but merely sets the parameters for determining the "fair market value"
of a sale of stocks. Such issuance was made pursuant to the Commissioner's
power to interpret tax laws and to promulgate rules and regulations for their
implementation.
Lastly, petitioner is mistaken in stating that RMC 25-11, having been
issued after the sale, was being applied retroactively in contravention to Sec.
246 of the NIRC. 26 Instead, it merely called for the strict application of Sec.
100, which was already in force the moment the NIRC was enacted.
WHEREFORE, the petition is hereby DISMISSED. The Resolutions of
the Court of Appeals in CA-G.R. SP No. 127984 dated May 23, 2013 and
January 21, 2014 are hereby AFFIRMED.
SO ORDERED. cDHAES

Peralta, Villarama, Jr., Mendoza * and Leonen, ** JJ., concur.

Footnotes
* Acting member per Special Order No. 1878 dated November 21, 2014.

** Additional member per raffle dated September 24, 2014.

1. Penned by Associate Justice Noel G. Tijam and concurred in by Associate Justices
Romeo F. Barza and Ramon A. Cruz.
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 2. Rollo , pp. 189-193.
3. Id. at 6-7.

4. Id. at 94-99.
5. "The legislative intendment of the deemed gift provision under Section 100 of
the Tax Code is to discourage the parties to a sale from manipulating their
selling price in order to save on income taxes. This is because under the Tax
Code, the measurement of gain from a disposition of property merely
considers the amount realized from the sale, which is the selling price minus
the basis of the property sold. Hence, if the parties would declare a lower
selling price per document of sale than the actual amount of money which
changed hands, there is foregone revenue and the government is placed at a
very disadvantageous position."

6. Rollo , p. 190.

7. NIRC, Sec. 99 (B): Tax Payable by Donor if Donee is a Stranger. — When the
donee or beneficiary is stranger, the tax payable by the donor shall be thirty
percent (30%) of the net gifts. For the purpose of this tax, a "stranger", is a
person who is not a:

(1) Brother, sister (whether by whole or half-blood), spouse, ancestor and

lineal descendant; or
(2) Relative by consanguinity in the collateral line within the fourth degree
of relationship.

8. "It is noteworthy to state that the above provision (Section 100 of the Tax Code)
does not mention of any exempt transaction. The above provision is clear
and free from any doubt and/or ambiguity. Hence, there is no room for
interpretation. There is only room for application."

9. Rollo , pp. 91-93.

10. Id. at 71-72.

11. An Act Creating the Court of Tax Appeals.

12. Providing for the Implementing Rules of the First Paragraph of Section 4 of the
National Internal Revenue Code of 1997, Repealing for this Purpose
Department Order No. 005-99 and Revenue Administrative Order No. 1-99.

WHEREAS, Section 4 of Republic Act No. 8424 (the National Internal

Revenue Code of 1997, 'the NIRC' for brevity) vests with the
Commissioner of Internal Revenue exclusive and original jurisdiction
to interpret its provisions and other tax laws, subject to review by the
Secretary of Finance;

xxx xxx xxx

WHEREAS, there is a need to further provide for the implementing rules of

the first paragraph of Section 4 of the NIRC.

xxx xxx xxx

Section 1. Scope of this Order. — This Department Order shall apply to all
rulings of the Bureau of Internal Revenue (BIR) that implement the
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 provisions of the NIRC and other tax laws.

Section 2. Validity of Rulings. — A ruling by the Commissioner of Internal

Revenue shall be presumed valid until overturned or modified by the
Secretary of Finance.

Section 3. Rulings adverse to the taxpayer. — A taxpayer who receives an

adverse ruling from the Commissioner of Internal Revenue may,
within thirty (30) days from the date of receipt of such ruling, seek its
review by the Secretary of Finance. . . .

13. Sec. 7 (a) (6), RA 1125, as amended:

Sec. 7. Jurisdiction. — The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

xxx xxx xxx

6. Decisions of the Secretary of Finance on customs cases elevated to him

automatically for review from decisions of the Commissioner of
Customs which are adverse to the Government under Section 2315 of
the Tariff and Customs Code.

14. G.R. No. 163583, August 20, 2008, 562 SCRA 511.
15. Section 1. Scope. — This Rule shall apply to appeals from judgments or final
orders of the Court of Tax Appeals and from awards, judgments, final orders
or resolutions of or authorized by any quasi-judicial agency in the exercise of
its quasi-judicial functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority, Social
Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification Administration, Energy
Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural
Invention Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by law.
16. G.R. No. 155996, June 27, 2012, 675 SCRA 20.

17. Municipality of Nueva Era, Ilocos Norte v. Municipality of Marcos, Ilocos Norte,
G.R. No. 169435, February 27, 2008, 547 SCRA 71.
18. Torres v. Limjap, 56 Phil. 141 (1931); citing Vol. II Sutherland, Statutory
Construction, pp. 693-695.

19. The Secretary of Justice v. Koruga, G.R. No. 166199, April 24, 2009, 582 SCRA
513.
20. 101 Phil. 209 (1957).

21. SEC. 11. Who may appeal; effect of appeal. — Any person, association or
corporation adversely affected by a decision or ruling of the Collector of
Internal Revenue, the Collector of Customs or any provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within
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 thirty days after the receipt of such decision or ruling.

22. Ursal v. Court of Tax Appeals, supra note 20.

23. Supra note 14, at 534.

24. G.R. No. 163445, December 18, 2007, 540 SCRA 536, 549-551.

25. G.R. No. 175723, February 4, 2014.

26. SEC. 246. Non-Retroactivity of Rulings. — Any revocation, modification or
reversal of any of the rules and regulations promulgated in accordance with
the preceding Sections or any of the rulings or circulars promulgated by the
Commissioner shall not be given retroactive application if the revocation,
modification or reversal will be prejudicial to the taxpayers, except in the
following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from
his return or any document required of him by the Bureau of Internal
Revenue;

(b) Where the facts subsequently gathered by the Bureau of Internal

Revenue are materially different from the facts on which the ruling is
based; or

(c) Where the taxpayer acted in bad faith.

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